Israel's Teva Pharmaceutical Industries potential $40bn offer to acquire drugmaker Mylan can transform the generic drugs segment, according to research and consulting firm GlobalData's deals analyst Gianfranco Zeppetelli.
Teva's offer is crucially contingent on Mylan not consummating its offer to acquire Irish firm Perrigo.
Mylan proposed a $28.9bn offer to acquire Perrigo, but its board of directors have refused to accept the offer saying that the merger substantially undervalues the firm and its future growth prospects.
Teva believes that its offer is an attractive approach to Mylan's non-binding offer for Perrigo, as it will allow Mylan to increase its offer for Perrigo.
The proposed combination of Mylan and Teva will transform the generics space, allowing creation of a differentiated business model that incorporates specialty and generic drugs with products, devices, services and technologies.
Zeppetelli said: "If the deal goes ahead, the combined company would create a global generics giant with nearly $30bn in revenue, and boasting a pipeline of more than 400 pending generic drug applications at the FDA.
"Teva also noted that there would be opportunities for substantial cost synergies and tax savings, which are estimated to be approximately $2bn annually.
"Teva initiated its acquisition strategy in March with the purchase of California-based Auspex Pharmaceuticals in a deal worth $3.5bn."
Mylan has expressed concerns that the deal may not pass antitrust regulatory scrutiny and Teva could sell operations to obtain regulatory clearance.
According to the analyst, the deal will help Teva to grow and reduce its exposure to an impending drop in Copaxone sales, as Mylan is also developing its own generic version of the same drug.
